Rise of Brics challenges oil world order
Excerpt:
The five developing economies are shaking up global markets, and they could be on the cusp of a major break from the existing order.
he annual meeting of the Brics countries (Brazil, Russia, India, China and South Africa) in August may see the group make decisions that have serious consequences for oil and energy markets, including a shift away from the petrodollar.
The Brics made news last year when they approved a motion to consider inviting new members. They hit the headlines again in April 2022 when they agreed to a proposal by China to establish the New Development Bank, which serves as an alternative for developing nations to Western/global financial institutions such as the World Bank.
Later in 2022, Saudi Arabia indicated its interest in formally applying for Brics membership, as its relations with the US have frayed while those with China and Russia have grown stronger. Riyadh’s steady drift into the Brics orbit has continued throughout 2023, and was shown most overtly by the announcement in March that the Kingdom had agreed to renew formal diplomatic relations with Iran as a result of a deal brokered not by the US, but by China.
The Brics group has now positioned itself as a looming threat to the longstanding world order in petroleum and other international trade
More Brics-related news broke in mid-March this year, with the IMF saying the total GDP of the five Brics nations had surpassed that of the G7. This extraordinary shift in global economic might received scant attention in the European and US press.
The Brics made more big news in April when they announced that 19 countries had requested to join the group—including Afghanistan, Argentina, Egypt, Indonesia, Mexico, Saudi Arabia and Thailand. By mid-May, stories circulated the number of applicants for Brics inclusion had grown to 25, and five more have joined the others in saying they would be interested in using a Brics-created digital currency to conduct international trades—including in oil and other petroleum-related goods.
The decisions made in advance of and during the annual Brics meeting in August are set to have major global implications and could dramatically increase the group’s already substantial geopolitical leverage.
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Keep your eye on the August meeting of BRICS could be another nail in the IMF central bank coffin IMO.